Microsoft closes its deal to buy Activision Blizzard

It now controls big titles like "Call of Duty," and this positions it as a rival to Sony, the industry's current top player.

Microsoft closes its deal to buy Activision Blizzard
Microsoft logo is seen on a smartphone placed on displayed Activision Blizzard's games characters in this illustration taken January 18, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

The backstory: Last year, Microsoft announced its plan to buy the gaming giant Activision Blizzard for US$69 billion. Blizzard is behind hits like World of Warcraft, Call of Duty and Candy Crush. But before this acquisition could go through, Microsoft had to jump through some hoops. It’s already a heavy hitter in the gaming world with its Xbox console, and it also publishes its own games. Merging the two companies raised some eyebrows about antitrust and monopoly issues.

Specifically, the US Federal Trade Commission (FTC) filed a lawsuit last year to put the brakes on this deal. Meanwhile, the UK also expressed worries over competition and initiated its own investigation. The acquisition also saw some pushback in other countries.

More recently: The EU gave the deal the green light in May. This came after Microsoft made some promises that calmed its competition concerns. China's State Administration for Market Regulation (SAMR) also approved the buyout in June.

Meanwhile, the UK's Competition and Markets Authority (CMA) was still opposing Microsoft's plan to grab Activision Blizzard. The regulator was concerned about how it could affect the booming cloud gaming scene. There was also the issue of how Microsoft could decide to make Activision games only available on its own cloud platform, Xbox Game Pass, which would take out of the equation other companies that work in game distribution.

Microsoft's response was to offer French game publisher Ubisoft Entertainment the rights to distribute Activision games in the cloud gaming market worldwide, except it would have non-exclusive rights in the European Economic Area. The CMA found this approach innovative and "structurally different" from Microsoft's original plan.

The development: Microsoft has just sealed the deal on that US$69 billion takeover of Activision Blizzard. It now controls big titles like "Call of Duty," and this positions it as a rival to Sony, the industry's current top player.

The UK's CMA played a crucial role here. It finally gave the green light after Microsoft agreed to let go of streaming rights for Activision's games to keep things fair and square in the competition arena.

But the FTC in the US, which initially tried to stop the deal, is still in the ring. The regulator is eyeing an appeal after it failed to block the merger, but it said it would review Microsoft's agreement with Ubisoft. 

Key comments: 

"Today is a good day to play. We officially welcome Activision Blizzard King to Team Xbox. Together, we'll create stories and experiences that bring players together, in a culture empowering everyone to do their best work and celebrate diverse perspectives," said Microsoft Gaming CEO Phil Spencer in a post on the X social media platform. 

"Whether you play on Xbox, PlayStation, Nintendo, PC or mobile, you are welcome here - and will remain welcome, even if Xbox isn't where you play your favorite franchise," said Spencer in a statement after the takeover.

"The new deal will stop Microsoft from locking up competition in cloud gaming as this market takes off, preserving competitive prices and services for UK cloud gaming customers," said the CMA in a statement.

"There are fears the UK is a bad place to do business and the tech industry in particular will be watching its moves closely," said Quilter Cheviot equity analyst Ben Barringer.